Government support for households and businesses with energy bills and higher interest payments pushed UK public borrowing to a record £22bn in November, the highest monthly level on record.
The Office for National Statistics (ONS) said the state spent more than it received in taxes and other income, meaning it had to borrow £13.9 billion more in November than a year earlier, as lending has reached its highest level for the period since monthly data began being issued in 1993.
government loans
Public sector borrowing was also higher last month than at the height of the coronavirus pandemic, when the government launched massive spending schemes to support consumers and businesses during successive lockdowns.
Livelihood payments to help people and businesses with rising energy bills were largely responsible for the increase in support payments to £13.2bn, up £3.3bn on a year earlier .
The impact of inflation is also felt on government finances. It has to pay more interest on its debt from mid-2021, the ONS said, mostly as a result of higher inflation.
The interest payable on UK government bonds – known as gilts – is linked to the higher level of retail price index inflation.
Interest payable on central government debt was £7.3bn in November, of which a base £4.3bn reflected the impact of inflation. Interest owed was £2.4 billion higher than in November 2021 and the highest since the monthly index of the measure began in 1997.
The Government’s Energy Bill Help Scheme – which gives households £400 towards the cost of their energy bills, paid in six evenly spaced installments between October and March – cost the government £1.9 billion in November.
The ONS said it could not yet calculate the full monthly cost of extra government spending on energy bill support under the Energy Price Guarantee scheme, which caps average household bills, and the Energy Bill Relief scheme for businesses. which started in October.
Governments across Europe are facing a sharp rise in the cost of funding emergency support schemes after Russia’s invasion of Ukraine fueled a dramatic rise in gas and electricity bills for households and businesses.
Chancellor Jeremy Hunt said: “Faced with the dual global emergency of a pandemic and Putin’s war in Ukraine, we have taken significant action to support millions of businesses and families here in the UK.
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“We have a clear plan to help halve inflation next year, but this requires some tough decisions to put our public finances back on a sustainable footing.”
The figures come as ministers consider options to extend energy support for businesses beyond April. Hunt has confirmed he will make an announcement early in the new year, although there are expectations the chancellor will reduce the generosity of the scheme. Reflecting high wholesale energy prices, it has been estimated that a six-month scheme could cost up to £48bn.
Total government borrowing for the first eight months of the 2022-23 financial year was £105.4bn, the fourth highest in the financial year to November since 1993, and £50.8bn more than November 2019 before the pandemic.
The national debt – the sum total of each year’s budget deficit – was 98.7% of GDP in November, a slight decrease of 0.3 percentage points compared to the same month a year earlier.
Divya Sridhar, an economist at accounting firm PwC, said energy support, high inflation and weaker economic growth will keep pressure on public finances. She added: “Continued support for energy bills and the ninth consecutive interest rate hike announced by the Bank of England last week will continue to put pressure on the public finances.”
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